As state legislators debated the new Fenway Park down to the close of the General Court’s formal session, a number of controversial banking bills languished in committee. For many in the state’s banking industry, no news was good news.
A top priority of many state associations was to ensure that Secretary of State William Galvin’s predatory lending bill did not pass. Galvin’s bill was sent to a study by the Joint Committee on Banks and Banking in June, as committee members awaited regulations from Commissioner of Banks Thomas J. Curry. Curry detailed his proposed regulations at a hearing at the Federal Reserve Bank of Boston on Friday.
Gov. Paul Cellucci and Lt. Gov. Jane Swift’s pressed a privacy bill, which included an opt-in provision opposed by business groups. At the end of the legislative session the bill remained in committee.
“The issues we were most concerned about for our members haven’t been resolved yet,” said Dale Zelony, director of legislative services for the Community Bank League of New England. “We are concerned our members may have to pay the price for other entities’ bad actions.”
At the same time state legislators considered privacy bills, federal banking regulators issued new privacy guidelines as a result of the Gramm-Leach-Bliley financial modernization act. The rules go into effect this fall, but financial institutions have until July 1, 2001, to be in full compliance.
“While we still continue to believe that a federal privacy statute is the most effective way to deal with the issue, recent comments by Gov. Cellucci and Lt. Gov. Swift on adjustments on their original positions on privacy are more sensitive to the concerns we’ve been expressing,” said Kevin F. Kiley, executive vice president of the Massachusetts Bankers Association.
Privacy issues have become a key concern for banks as they have entered into agreements with vendors or third parties to sell new products like insurance or brokerage services. Because many banks operate in more than one state, the passage of differing state legislation would be costly to banks, proponents of federal rules say.
Trade groups met with Curry as his office drafted privacy regulations. The FDIC and the Federal Reserve held hearings on the topic this summer.
“We’re pleased with everything that’s happened,” said Maureen Elliot, chairwoman of the Massachusetts Mortgage Bankers Association. “We’ve been working with Tom Curry all along.”
‘Private Businesses’
Recent legislative sessions have been marked by debate over ATM surcharge ban bills, or by landmark legislation like the bank insurance bill. This session the banking bills that made it to the governor’s desk involved changing the rules for savings bank corporators and tax escrow.
“On the legislative front we also spent a lot of time on bills that either we opposed or tried to seek refinements or suggest changes as it went through the legislative process,” Kiley said. “We were successful in holding up passage of the ATM surcharge ban bill.”
The Banking Committee voted favorably last summer on a group of six bills that would ban ATM surcharges, but the bills remained at the Senate Ways and Means committee at the formal session’s close. The battle over ATM surcharges took center stage two years ago when the state senate passed a surcharge ban, but House Speaker Thomas Finneran did not bring the bill to a vote in the House.
State trade groups formed the SUM surcharge-free ATM network with NYCE Corp. in the fall of 1998. The SUM network has grown to more than 1,800 ATMs in Massachusetts.
“I think the industry has really stepped up to the plate in a very proactive fashion,” Kiley said.
The Community Bank League of New England lobbied in support of the surcharge ban two years ago. But SUM has changed the market significantly, and the bill is dead, Zelony said.
“I feel very confident that because all of the depository owners of ATMs are happy with SUM even if they don’t belong to SUM, there’s not enough of a groundswell within the industry it most affects to go forward,” Zelony said.
Following the mergers of Fleet Bank and BankBoston, and acquisition of the fee-free USTrust by Citizens Bank, Cambridge Rep. Jarrett T. Barrios filed a bill to limit bank fees this spring. The bank fee fairness bill would require banks to explain fee increases and show that fees are tied to a bank’s administrative costs. The Jamaica Plain consumer group National Assistance Corp. of America supported the bill, asserting that bank mergers have resulted in higher fees for retail customers. Barrios filed the bill, but it was not released or assigned to committee. Barrios said he intends to refile the bill early next session.
Community banks often tout their lower fees as a selling point. But the Community Bank League opposed Barrios’ bill because of the regulatory burden it would cause.
“Banks are private businesses,” Zelony said. “To have to go through a process to have their fees approved, we can’t say that’s a good thing. I know his objective is a good objective, but is the whole industry going to have to pay for a few bad apples?”
